Correlation Between Fairfax Fin and Fairfax Financial
Can any of the company-specific risk be diversified away by investing in both Fairfax Fin and Fairfax Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fairfax Fin and Fairfax Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fairfax Fin Hld and Fairfax Financial Holdings, you can compare the effects of market volatilities on Fairfax Fin and Fairfax Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fairfax Fin with a short position of Fairfax Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Fin and Fairfax Financial.
Diversification Opportunities for Fairfax Fin and Fairfax Financial
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fairfax and Fairfax is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Fin Hld and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial and Fairfax Fin is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fairfax Fin Hld are associated (or correlated) with Fairfax Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fairfax Financial has no effect on the direction of Fairfax Fin i.e., Fairfax Fin and Fairfax Financial go up and down completely randomly.
Pair Corralation between Fairfax Fin and Fairfax Financial
Assuming the 90 days trading horizon Fairfax Fin is expected to generate 1.19 times less return on investment than Fairfax Financial. But when comparing it to its historical volatility, Fairfax Fin Hld is 1.7 times less risky than Fairfax Financial. It trades about 0.36 of its potential returns per unit of risk. Fairfax Financial Holdings is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 174,999 in Fairfax Financial Holdings on August 28, 2024 and sell it today you would earn a total of 22,085 from holding Fairfax Financial Holdings or generate 12.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Fin Hld vs. Fairfax Financial Holdings
Performance |
| Timeline |
| Fairfax Fin Hld |
| Fairfax Financial |
Fairfax Fin and Fairfax Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Fin and Fairfax Financial
The main advantage of trading using opposite Fairfax Fin and Fairfax Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Fin position performs unexpectedly, Fairfax Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Fairfax Financial will offset losses from the drop in Fairfax Financial's long position.| Fairfax Fin vs. Income Financial Trust | Fairfax Fin vs. Reliq Health Technologies | Fairfax Fin vs. iA Financial | Fairfax Fin vs. UnitedHealth Group CDR |
| Fairfax Financial vs. Intact Financial | Fairfax Financial vs. iA Financial | Fairfax Financial vs. TMX Group Limited | Fairfax Financial vs. Onex Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| CEOs Directory Screen CEOs from public companies around the world |